The Help to Buy mortgage guarantee scheme is targeted at creditworthy borrowers saving for a deposit on their main home, the CML’s director general, Paul Smee, told lenders in Wales on Friday.

But the industry need to understand what constitutes success for the scheme – and the government’s exit strategy when Help to Buy is due to come to an end after three years.

Speaking at a CML Cymru lunch in Cardiff, Paul Smee acknowledged the merits of Help to Buy but highlighted the need for an “exit path.” Recalling the effects of the stamp duty holiday which ended in March 2012, the CML director general continued: “Schemes which end in a cliff edge distort the market and tend to create a bubble on one side and a desert on the other.”

Paul Smee’s speech to lenders coincided with the views of outgoing Bank of England governor, Sir Mervyn King. In a television interview at the weekend, Sir Mervyn said that the UK did not need a scheme providing permanent help to borrowers but the return of a “healthy mortgage market with competing lenders attracting borrowers.”

At the CML Cymru lunch, Paul Smee pointed out that Help to Buy marked a shift away from schemes concentrating on newly-built property, and widened access for a broader group of borrowers whose purchase is being delayed by the fact that lenders are primarily offering mortgages at a loan-to-value ratio of 80%.

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